inkbluesky

Via Mark Kleiman, Like master, like man

The expropriation of shareholder wealth by predatory corporate executives is one of the great scandals of the past quarter-century, and in particular the past decade. "Compensation consultants" play a central role in this marginally legal enterprise. (I say "marginally legal" because corporate executives, as fiduciaries for the shareholders, have a legal duty not to overpay themselves.)

and mark links to this article, Advice on Boss's Pay May Not Be So Independent

For Ivan G. Seidenberg, chief executive of Verizon Communications, 2005 was a very good year. As head of the telecommunications giant, Mr. Seidenberg received $19.4 million in salary, bonus, restricted stock and other compensation, 48 percent more than in the previous year.

Others with a stake in Verizon did not fare so well. Shareholders watched their stock fall 26 percent, bondholders lost value as credit agencies downgraded the company's debt and pensions for 50,000 managers were frozen at year-end. When Verizon closed the books last year, it reported an earnings decline of 5.5 percent.

And yet, according to the committee of Verizon's board that determines his compensation, Mr. Seidenberg earned his pay last year as the company exceeded "challenging" performance benchmarks. Mr. Seidenberg's package was competitive with that of other companies in Verizon's industry, shareholders were told, and was devised with the help of an "outside consultant" who reports to the committee.

In a take on Spiderman's uncle, with great wealth comes great responsibility. Capitalism is a good system, but to operate in a way that is responsible with an eye toward what Jefferson and Madison saw as the social contract, capitalism can't be allowed to be the giant lizard that eats its own tail. Shareholders, in other words, Mom, Pop, pension funds, and retirees are taking a bath because guys like Ivan are being pigs at the trough. As the middle-class continues to be squeezed between rising health care costs and decreases in annual raises, this seems especially unethical.

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U.S. Research Funds Often Lead to Start-Ups, Study Says

A new study of university scientists who received federal financing from the National Cancer Institute found that they generated patents at a rapid pace and started companies in surprisingly high numbers.

The study, the authors say, suggests that the commercial payoff for the government's support for basic research and development in the life sciences is greater than previously thought.